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idaho legislature

Idaho Medicaid Between a Rock and a Hard Place

By Sharon Fisher, 1-19-10

The Health and Welfare budget hearing is always sort of depressing to listen to, because they deal with so much human misery, but this year it’s positively Kafkaesque. It’s a double whammy – the state budget needs to be cut because the economy is in the pits, but precisely because the economy is in the pits, the load on the department is heavier than ever.  Plus, cutting Health and Welfare has other ramifications, ranging from losing federal matching funds to damaging the local economy to opening the state up to lawsuits.

The division that handles food stamps is processing 9,000 new applications per month, a 55 percent increase over 2007, for a total increase from 87,000 families in 2007 to 179,000 today, said Director Richard Armstrong. In addition, each of those families has to be recertified every six months. Child support requests are up 9 percent. The 2-1-1 CareLine processed 160,000 calls in fiscal 2008, 214,000 calls last fiscal year, and in the first six months of fiscal 2010 has already logged 109,000 calls, he said. Service integration “navigators” handled 1400 emergency calls in 2008, and this year will handle 2200, an 80 percent increase, he said.

Tuesday’s hearing with the Joint Finance-Appropriations Committee (JFAC) included the departmental overview as well as Medicaid. After the public schools, H&W is the biggest chunk of the state budget, and Medicaid is the biggest chunk, 79 percent, or $1.6 billion, of that. Medicaid recipients are up from 184,000 in 2007 to 209,000, a 13 percent increase, Armstrong said. Altogether, $24 million was needed just for an increase in caseload alone. And 96 percent of the Medicaid budget goes out in benefits to recipients, with just 1.7 percent to office personnel (the remainder is to operational and capital expenses).

“For every $1 reduction in the general fund from Medicaid, we’re cut $3.75 in matching federal funds,” Armstrong said. In addition, because Medicaid money is largely paid to health care providers, “reductions have a profound impact on Idaho businesses,” he said.

One of the biggest problems Medicaid is dealing with right now is that the state doesn’t know how much it’s going to have to pay. Before the American Recovery and Reinvestment Act (ARRA) funding, also known as stimulus funding, the federal government’s share, known as the Federal Medical Assistance Percentage (FMAP), paid 69 percent of Medicaid expenses, with the state picking up the rest. The stimulus brought that up to 79 percent, which is scheduled to end in December, 2010, and return to the 69 percent rate – known in the department as “the cliff.” After that, it’s anyone’s guess. It’s hoped that the federal government will extend the FMAP increase; it’s included in the House health care reform bill, but not the Senate one, but no one is sure which bill, if any, will pass.

In addition, some members of Idaho state government are taking various steps to keep Idaho from being included in whatever health care reform passes; it is unclear whether that could jeopardize any FMAP increases included in the health care reform bill. Armstrong said he expected to know by August. In the meantime, Governor C.L. “Butch” Otter has committed $68 million from the Millennium Fund, plus $3 million from the budget stabilization fund, for a total of $71 million, in case it is needed to pay for a smaller FMAP rate, Armstrong said. (The upside, if the FMAP increase does happen, is that Idaho will then have $71 million it could devote to other needs.)

Meanwhile, for 2010, the department is now facing a minimum of the 1.6 percent holdback called for by the Governor during his State of the State message – and which is likely to be even larger, said JFAC co-chair Senator Dean Cameron (R-Rupert), because December tax revenues came in lower than expected.

“How do you do it and keep everything from falling apart?” asked Senator Nicole LeFavour (D-Boise). “There’s very challenging decisions the department has to make,” said David Taylor, deputy director of support services. “As far as what it’s going to look like, I truly don’t know.” Armstrong also suggested some regional offices may be closed.

JFAC co-vice-chair Shawn Keough (R-Sandpoint) asked about reducing salaries, instead of furloughs or layoffs, but Armstrong noted that H&W workers already make 15 percent below market and that in some departments, even with the current recession, there was “unacceptably high turnover.” In addition, once the economy recovers, because those salaries will lag even further behind, the turnover rate would increase even more, he said. “The best resource we have is our skilled employees.”

Medicaid has reduced the rates at which it pays some services, said Leslie Clement, division administrator of Medicaid. The department tried to reduce reimbursement rates for some children’s services but was stopped by a court injunction, and initially saved $1 million by cutting non-emergency transport, but had to add it back when federal rules were changed, she said.

Beyond that, Idaho is limited in what it can do, Clement said. It can’t reduce its eligibility standards because they’re already at the minimum, she said. And while it is true that Idaho has some optional programs that were not mandated by Medicaid, stopping them could end up costing more in the long run, she said. For example, were Idaho to cut pharmacy services, the result could be an increase in hospitalization and institutionalization and more problems on the street due to people not getting medication for their mental health issues, she said. “We have to be careful what we get rid of and what the resulting consequences could be.”

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